The financial institution made the decision following release of a U.S. National Transportation Safety Report into a 2010 Enbridge pipeline rupture

Douglas Channel, the proposed shipping route for oil tanker ships in the Enbridge Northern Gateway Project, is pictured in an aerial view just south of Kitimat, B.C., on January 10, 2012. A U.S. regulator's report that found Enbridge had behaved like the Keystone Kops during a 2010 massive oil spill in Michigan has prompted VanCity Investment Management to divest its Enbridge holdings in the IA Clarington Inhance SRI funds, which it manages, saying the pipeline company no longer meets the credit union's criteria for socially responsible investment.

VANCOUVER -- Enbridge Inc. lost one of its small investors Wednesday after Vancity Investment Management said the pipeline company’s “Keystone Kops” handling of a massive 2010 oil spill in Michigan suggests it no longer meets the credit union’s criteria for socially responsible investments.

Calling it a “matter of normal business,” the financial institution announced it has divested its Enbridge shares in two IA Clarington Inhance SRI funds, following the release of the U.S. National Transportation Safety Report into Enbridge’s 2010 pipeline rupture, which spilled more than 20,000 barrels of oil into the Kalamazoo River and resulted in the worst land-based oil spill in U.S. history.

Vancity, a sub-advisor on three funds for IA Clarington, determines which shares can be held based on environmental, social and governance (ESG) criteria for socially responsible investment, while portfolio managers regularly analyze SRI funds to determine what to divest.

“Vancity Investment Management’s portfolio managers balance risk, return and the impact of all the investments that are made,” Tamara Vrooman, Vancity’s president and CEO, said in a statement.

“They believe in engaging with companies to improve their ESG performance, however, if companies no longer meet the ESG criteria, they will divest the holdings from the portfolio.”

The credit union noted the individual Enbridge holdings in the mutual funds were small: the monthly income fund was worth $110 million, with share holdings of 1.3 per cent, while the Canadian Equity fund is worth $33.7 million, with shares of three per cent.

The move by Vancity follows concerns from its members and significant controversy in B.C. over Enbridge’s planned $6-billion Northern Gateway pipeline, which is slated to carry crude oil from Alberta to Kitimat, B.C., where it will be exported by supertanker to Asia and around the world.

The pipeline is under review by a federal environmental assessment panel, which jointly represents the National Energy Board and the Canadian Environmental Assessment.

Bob Walker, vice-president of sustainability for Northwest & Ethical Investments LP (NEI), which has pressured Enbridge for the past six years to address the risks associated with first nations’ opposition to the proposed pipeline, said he’s not surprised by Vancity’s decision.

NEI sponsored a resolution at this year’s annual general meeting asking for a report to shareholders on what impact the first nations’ opposition will have on the pipeline, but the motion failed to pass after gaining only 29 per cent support from investors. A coalition of Northern B.C. first nations called the Yinka Dene Alliance and their supporters had taken a train across Canada to the AGM.

“We certainly share [Vancity’s] frustration with Enbridge; things seem to be going from bad to worse with the company,” Walker said.

NEI has owned 148,000 Enbridge shares in its ethical funds portfolio, worth about $6 million, for more than six years. But Walker said the company may follow Vancity’s lead later this year, depending on the outcome of meetings with Enbridge managers in September and board of directors in November.

Enbridge said in an emailed statement that while it respects the fund managers’ decision as to which companies they invest, it regrets Vancity’s decision.

The company argues it has made significant enhancements since the Michigan spill, which include pipeline safety, leak detection, control centre training and procedures and emergency response protocols, and plans to do more work over the next two years in an attempt to “be the industry leader in the protection of our workers, the public and the environment.”

The company also said it is “committed to being a good corporate citizen and neighbour,” and will continue to invest in renewable and renewable and alternative energy and in supporting research and development into emerging technologies in this area.

As an investment, Enbridge had earnings of $991 million in 2011. Enbridge has paid dividends for almost 60 years. The annualized dividend is currently $1.13 per share, and has been increased every year since 1996.

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Douglas Channel, the proposed shipping route for oil tanker ships in the Enbridge Northern Gateway Project, is pictured in an aerial view just south of Kitimat, B.C., on January 10, 2012. A U.S. regulator's report that found Enbridge had behaved like the Keystone Kops during a 2010 massive oil spill in Michigan has prompted VanCity Investment Management to divest its Enbridge holdings in the IA Clarington Inhance SRI funds, which it manages, saying the pipeline company no longer meets the credit union's criteria for socially responsible investment.

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